Simplify and solving practice 2
1 answer:
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Answer:
Now we can find the second central moment with this formula:
And replacing we got:
And the variance is given by:
And replacing we got:
And finally the deviation would be:
Step-by-step explanation:
We can define the random variable of interest X as the return from a stock and we know the following conditions:
represent the result if the economy improves
represent the result if we have a recession
We want to find the standard deviation for the returns on the stock. We need to begin finding the mean with this formula:
And replacing the data given we got:
Now we can find the second central moment with this formula:
And replacing we got:
And the variance is given by:
And replacing we got:
And finally the deviation would be: